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Jan 8, 2011

Expiry of Government Guarantee on Deposits

Expiry of Government Guarantee on Deposits

We highlight news on the expiry of government guarantee on deposits. Subject to limits, not all money kept in Singapore bank savings accounts will be guaranteed by the government from the first of January 2011.

This update is obtained from Monetary Authority of Singapore site.

"On 16 October 2008, the Singapore Government announced that it would guarantee all Singapore Dollar and foreign currency deposits of individuals and non-bank customers in banks, finance companies and merchant banks until 31 December 2010.

1. Why is the Government guarantee not extended beyond 31 December 2010? What is the impact?

The Government guarantee was an extraordinary measure in response to blanket guarantees by other jurisdictions in the region, to ensure a level international playing field for financial institutions in Singapore. It was a precautionary step as Singapore's financial system remained stable and sound during the global financial crisis, reflecting its strong fundamentals.

In light of improving financial market conditions, Singapore's financial system is not expected to be materially affected when the hitherto unused Government guarantee on non-bank deposits expires on 31 December 2010.

2. What happens after the guarantee expires? Are depositors still protected?

The expiry of the guarantee will not affect the operation of Singapore's deposit insurance scheme. Small depositors will continue to be protected under the scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC).

Consumers should always exercise discretion in their choice of financial institutions, and products and services, whether or not there are explicit protection schemes."

"In the event a Scheme member fails, all of your eligible accounts with that member, except for deposits under the CPF Investment Scheme, are aggregated and insured up to S$20,000, net of your liabilities to the member, such as loans.

Deposits are not insured separately in each branch office of a Scheme member i.e. all your eligible accounts maintained with different branches of a Scheme member are aggregated and insured up to S$20,000 net of your liabilities to the member.

Moneys held in bank deposits under the CPF Investment Scheme (CPFIS) are separately insured up to S$20,000."